JOHN MENADUE. Health Ministers may be in office but they are seldom in power

The major barrier to health reform is the power of providers. A succession of Australian health ministers Liberal and Labor for three decades have failed in any serious health reform.  It is a very sorry story. Any Minister, Liberal or Labor who wants to reform health must be prepared to take on the providers.  Otherwise, we can forget serious health reform. 

Aneurin Bevan who launched the UK NHS  in 1946, in my view the best health service in the world, knew a few things about health but more importantly, he knew much more about political power and how to exercise it in the public interest. He drew on the strong support of the community, a minority of doctors and the majority of nurses. He won the day by outflanking the main body of doctors.

In Australia, in recent decades there have been numerous sensible proposals for health reform but providers have invariably run them off the road.

The resistance of doctors, for instance, is often based on financial self-interest, but it also aligns with a general fear of change and professional conservatism. It is difficult for those who are “inside” a system – be they administrators, professional providers or policymakers – to conceive of other ways of delivering services. Institutional inertia is a strong force. And in health care which is a very complex system, it is easy to lose sight of the fact that delivering services is not, in itself, the objective. That objective is serving the community not providers.

Vested interests dominate the public ‘debate’.  The public, patients and consumers are ignored.

The rent seekers are the same groups who so selfishly and ferociously led the opposition to Medibank in 1974. They are still with us today but in a different guise. The AMA has a long and dubious history in opposing key health reforms going back to its opposition to the Pharmaceutical Benefits Scheme in 1942. It has not greatly changed when reform is proposed.

These vested interests include the AMA, the Australian Pharmacy Guild, the Private Health Insurance funds, Medicines Australia and the state and territory health department bureaucracies. They all have well-resourced lobbyists to promote their interests.

In addition, there is a general “pro-business” push to open up more aspects of health care to the private sector, particularly pathology and radiology. And the AMA is turning a blind eye to the growing corporate takeover of general practice and vertical integration into radiology and pathology.

In 2009 the Australian Society of Ophthalmologists had a bruising battle with Minister Roxon who proposed that the Medicare rebate for cataract surgery be halved in light of major technological advances that dramatically cut time for treatment and reduced costs. The result. The producers, the eye surgeons with their dishonest campaign with media support won. Again. The Minister backed down

More recently there was private discussion between some doctors and the Department of Health to move away from fee for service, often known as ‘turnstile medicine’, to remuneration based more on salaries and contracts to provide better care for the chronically ill. The result? It didn’t happen because it was opposed by the  Royal Australian College of General Practitioners. It was same old story The providers won again and the interest of patients were not even  represented at the table for discussions

In 2018 we have price gouging by many medical specialists. Their anti-social behaviour is being ignored. They are too powerful to challenge.

The Pharmacy Guild strongly defends the privileged position of pharmacists. It has the major political parties in its pocket. The Guild strongly defends the many restrictions on competition – prohibition on pharmacies in supermarkets, prohibition on price advertising, restrictions on location and ownership of pharmacies and exclusive rights to sell many non-prescription medications.  It treats its members as shopkeepers rather than highly trained professionals.

Through lobbying, faint-hearted governments are also very vulnerable to foreign pharmaceutical firms  ( Big Pharma) who are able to exploit their power in patents. Medicines Australia, the body representing manufacturers and distributors of drugs, successfully lobbies the Commonwealth to pay very high prices for prescription pharmaceuticals, much higher than in NZ.

The Private Health Insurance companies are expensive financial intermediaries, benefiting from a $12b annual taxpayer subsidy through the rebate, and additional support in the form of the Medicare Levy Surcharge, which subsidises those with high incomes to hold PHI. Not even at the height of manufacturing industry protection were people actually given cash subsidies to buy Holdens and Falcons.

Before the 2007 election, Kevin Rudd secretly wrote to the PHI industry shamefully assuring it that their taxpayer subsidies would continue under a Labor Government.  We learned about it years later. The industry never publicly defends its $12 b pa subsidy. It is too ashamed. Instead, it lobbies in private. The private providers win again and again. The public interest seldom gets a look in.

The $12b annual subsidy to PHI is the real privatisation threat that is aimed at the heart of Medicare.

In an economy where many traditional industries, from manufacturing through to print media, are facing huge competitive pressure and disruption, health care is seen as one last remaining growth sector, offering easy picking for business. A  whole gaggle of lobbyists is working feverously to help providers protect and advance their interests in the large and growing health sector.

Part of the problem lies in the Commonwealth bureaucracy. Commonwealth Ministers for Health are very dependent on the Department of Health and Ageing, particularly, as is often the case, when ministers are not across the issues and don’t have a clear policy program themselves.

DHA is ill-equipped for policy reform. Its objective seems to be to keep the peace with provider lobbies. The Department is structured in ways that reflects the interests of providers such as doctors and pharmacists, rather than on the basis of community interests, such as acute care, chronic care or demography. It has expertise in administering existing programs but it has little economic expertise. Government reports of its performance have been highly critical.

The Ministerial/Departmental model in health has failed. It is incapable or unwilling to contest the power of the rent seekers. The community is effectively excluded.

Health reform is too serious a matter to be left to the Department of Health. It fails time and time again.

The providers so often win with lobbying because with few exceptions the media does not really understand health issues. Press releases from pharmaceutical firms, pathologists and health insurers and other rent-seekers provide ready made copy for under-resourced journalists. The Australian and the Australian Financial Review invariably support the view of providers. The public interest is ignored.

To counter the  self-interest of many providers organisations  I have advocated for several years a Health Reform Commission composed of independent and professional people to inform and lead a public discussion and advise on important health reform issues. Clinicians should be included, but none of the vested interests. It should include economists and people of good standing in business,trade unions and the community. They should be ‘outsiders’ not ‘insiders’.

The Law Reform Commission established by the Whitlam Government in 1975 is an example of how enquiries and consultations can be conducted with the community in order to make recommendations to government that are well-informed. The Law Reform Commission estimates that over 85% of its reports have been either substantially or partially implemented making it an effective and influential agent for reform. The Reserve Bank is another example of how a respected, professional and independent body can be a leader in public discussion of important issues. We have no such body in the health sector. The result is that providers have a very easy and often uncontested run

A major objective of a Health Reform Commission would be to outflank the vested interests and carry an informed discussion with the community,

A general remit to the HRC would be to encourage service cost discovery, price discovery and quality discovery, integrity (fraud and abuse) and fairness (access to care regardless of means or location) Most importantly the whole health system must be transparent and providers made publicly accountable

In addition to these general responsibilities, there could be specific referrals to the HRC e.g.

  • Ways to phase out PHI subsidies and get better value from health dollars.-perhaps a Medicare dental scheme or a Hospital Benefit Scheme similar to the Medical Benefit Scheme.
  • How to better integrate Commonwealth and State funding and delivery of services.
  • How to establish ‘medical homes’ in primary care which include both private and public clinics that provide a range of services.
  • Remove perverse incentives for the remuneration of doctors.
  • Reshape the health workforce to the needs of the twenty-first century and not the nineteenth century as we have at present with myriad restrictive practices and demarcations and denial of opportunities for nurses, allied health workers and paramedics.

One other related model is the “citizen jury” – so named because the citizens to be consulted are selected on a random basis and are informed by professional and independent experts. They could be asked to provide their advice back to government on such key issues as how co-payments should be reformed. End of life issues could also be canvassed as well as many expensive interventions that have limited effectiveness. These citizens’ juries in health could be important vehicles for an informed national conversation on health, a conversation that we do not have at present.

Unless we address the issue of provider power and how and who exercises that power in the health sector we will not achieve worthwhile reform. Power is in the hands of providers. It is not in the hands of the community, patients or even governments. That is the key issue. We need leadership, institutions and processes to focus on how we overcome this blockage to health reform.


This entry was posted in Health. Bookmark the permalink.

One Response to JOHN MENADUE. Health Ministers may be in office but they are seldom in power

  1. Ian Webster says:

    Dear John,

    The vision for the British NHS in the postwar period has stood the test of time although ravaged by UK Governments, not always the conservatives. That it has survived the test of time was shown recently in its rating as the best health care system internationally, by the US-based Commonwealth Fund in 2017.

    There are powerful vested interests, as you say, including elements of my profession and the departments/ministries which are there to implement health policies for the people. At one time, I though departments of health were important agencies for getting things done for the public’s health; I worked with them to do this. But I found when chairing policy and advisory committees/councils for the Commonwealth and State Governments, that when important areas of public policy were handed to the health minister, they and their departments too often failed to deliver. There were some exceptions amongst the ministers, but it was hard going for them.

    I am thinking of policies and programs in – mental health, alcohol and drug problems, suicide prevention, responding to disabilities, ageing, health problems amongst homeless young people and older people, health and welfare of Indigenous Australians and, most disappointingly, in measures to promote health and well-being.

    As soon as the health minister and the powerful and well-resourced health department became responsible, other departments and ministers retreated. Health is seen as powerful hegemony which, frightens off other key players – in government and in the non-government sector.

    These issues of health and health care, which are also social policy, need to be addressed by interests, expertise and representation from different areas, as you advocate.

    Also we need to recognise that Australia or an Australian state is not a homogeneous blob of people but an aggregation of many different communities. This means the nature and structures of communities must be a central pivot in devising policies for health and health care.

Comments are closed.